Niantic Layoffs Loom as Pokémon Go Maker Plans Games Division Sale

Pokemon Go has generated $8 billion since 2016, yet Niantic recently laid off 230 employees. The mobile game reached one billion global downloads in its first year, but now faces an uncertain future as talks of a possible sale emerge.

Niantic Inc. cut nearly 25% of its core team and might sell its gaming division for $3.5 billion. The company revolutionized mobile gaming with Pokemon Go and drew more than 500 million players by late 2016. The company’s path has taken an unexpected direction lately.

Niantic Announces 230 Jobs Cut Amid Sale Talks

Niantic announced a major restructuring in June 2023 that cut 230 jobs – about 25% of its workforce. CEO John Hanke linked these cuts to a gap between the company’s expenses and revenue after the COVID-19 pandemic boom ended.

The company made deeper changes beyond just reducing its workforce. They closed their Los Angeles studio and stopped several projects. Niantic pulled the plug on:

• NBA All-World game
• Marvel: World of Heroes production
• Several other upcoming projects

Revenue had dropped back to pre-pandemic levels, and new projects didn’t bring in the money they had hoped for, Hanke explained. The company also struggled with the augmented reality market, which grew slower than predicted due to tech hurdles.

The mobile gaming world has changed dramatically. Players spent 5% less on App Store games, bringing the total to $110 billion. New app store rules and mobile advertising made it harder to attract users.

These job cuts mirror a larger trend across the gaming industry. An October 2023 survey showed that 35% of developers lost their jobs. Quality assurance teams took the hardest hit, with 22% losing their positions. This led 56% of developers to worry about more cuts coming.

Niantic still shows its steadfast dedication to Pokemon GO, which remains their top priority and what they call a “forever game”. They keep pushing forward with augmented reality development while adjusting to today’s market realities.

Saudi-Owned Scopely Offers $3.5B for Gaming Division

Scopely Inc., now under Saudi Arabia’s Savvy Games Group ownership, might buy Niantic’s gaming division for $3.5 billion. The companies could announce this deal in the coming weeks. Pokémon Go and other mobile games from Niantic’s collection would be part of this purchase.

This deal fits perfectly with Savvy Games Group’s plans to grow stronger in mobile gaming. Savvy’s CEO Brian Ward had mentioned his plans to add a ‘genre-leading’ mobile game to their collection. Savvy Games Group bought Scopely for $4.9 billion in 2023.

Both companies started working together in August 2024. Niantic agreed to expand its games to Saudi Arabia, the United Arab Emirates, and Egypt. Saudi Arabia’s Public Investment Fund uses these mutually beneficial alliances to broaden its economy through video game investments.

The deal would revolutionize the mobile gaming world if it goes through. Saudi Arabia’s sovereign wealth fund manages about $930 billion in assets and has invested outside the Kingdom since 2014. People close to the talks say nothing is final yet, and the deal might not happen at all.

Pokemon Go’s Future Hangs in Balance

Pokemon Go’s revenue shows a downward trend in the mobile gaming market. The game earned $841.10 million in 2023, which was 7.9% less than 2022. This decline continued through early 2024, with first-half earnings of $361.40 million – a 7.1% drop compared to the same period in 2023.

The game’s financial picture has changed by a lot since its peak during the pandemic. Revenue data across regions shows:

• The United States leads revenue at $3.00 billion (38.6% of total revenue)
• Japan comes second with $2.45 billion (31%)
• Germany holds third place at $395.10 million (5%)

Community concerns have grown about possible changes under Scopely’s ownership. Players worry about increased monetization based on their experience with other Scopely-managed games. Many dedicated players have started moving their Pokemon to Pokemon Home as a safety measure, though this transfer works only one way.

Pokemon Go continues to be a major money maker with $7.90 billion in lifetime gross revenue. The game’s success now depends on finding the right balance between monetization and player satisfaction. Recent revenue trends point to changing player involvement patterns as we move past the pandemic era.

Conclusion

Niantic’s trip from Pokemon Go’s phenomenal success to its current position shows major changes in the mobile gaming industry. The company has cut 230 jobs while learning about a $3.5 billion sale to Scopely. Pokemon Go’s declining revenue emphasizes evolving player patterns in the post-pandemic era, despite its impressive $7.9 billion lifetime earnings.

Saudi-owned Savvy Games Group might acquire the gaming division and reshape both Niantic’s future and Pokemon Go’s direction. Players have valid concerns about increased monetization under new ownership, particularly given Scopely’s track record with other games. The game’s lasting success depends on a delicate balance between profitability and player satisfaction during this significant transition period.